Budget 2019: This budget is for new India, says PM Modi1 min read . Updated: 01 Feb 2019, 04:59 PM IST
- Main tax proposals have been left for full budget in July
- Those earning upto Rs. 5 lakh a year will get full tax rebate
As finance minister Piyush Goyal presents the National Democratic Alliance’s (NDA) sixth and final budget, an interim one, all eyes are on two key areas — income tax and farm package — in the pre-election season. Standing in as finance minister as Arun Jaitley is on medical leave, this is Goyal’s first budget speech, though it is the second time that he is holding interim charge of the finance ministry. Catch all the budget 2019 highlights here.
The unorganized labour force, about 40 crore people, haven’t ever received any help from previous governments. The beneficiaries will get assured monthly pension after reaching the age of 60 years now.
12 crore farmers, 3 crore taxpayers, 30 crore labourers will benefit from the Budget. Many governments announced schemes for farmers but only those owning large pieces of land would benefit. Our scheme will reach out to the small farmer who has always been left out
FM Goyal said he has not made any big changes in tax proposals as it will be decided in the main budget. "In July 2019 when the second term budget comes then the main tax proposals will be presented before you," Goyal said.
Piyush Goyal says that the PM Kisan Scheme is the biggest one ever for farmers. "Those sitting in AC rooms cannot understand the plight of the small farmers. Keeping this in mind, we have introduced Pradhan Mantri Kisan Samman Nidhi scheme. This is a historic decision," he said at a post-budget press conference.
BJP chief Amit Shah said the budget has met the expectations of farmers, labourers and middle class. "By bearing a cost of ₹75,000 crore,the govt will implement Pradhan Mantri Kisan Samman Nidhi scheme. This scheme will also benefit those farmers who do not take loans," he said.
Congress leader Shashi Tharoor said the whole exercise has turned out to be a damp squib. "We've seen one good thing that is tax exemption for the middle class. ₹6000 in income support for farmers boils down to ₹500 per month. Is that supposed to enable them to live with the honour & dignity?," Tharoor tweeted.
Union agriculture minister Radha Mohan Singh said, "We have also issued guidelines for Pradhan Mantri Kisan Samman Nidhi scheme. In 2018-19 financial year, for months before March, ₹2000 will be transferred to farmers' accounts, and in the financial year 2019-20 farmers will get ₹6000."
Former finance minister P Chidambaram Friday termed the union budget as an "account for votes" and not a "vote on account".
"It was not a Vote on Account. It was an Account for Votes," Chidambaram tweeted soon after the presentation of the Union Budget.
He also thanked Finance Minister Piyush Goyal for "copying" the Congress declaration that the poor will have the first right to resources of the country.
The senior Congress leader claimed that the government had missed the fiscal deficit target, as warned by him earlier.
"Thank you Interim FM for copying the Congress' declaration that the poor have the first right to the resources of the country.
"As I had warned, Government misses Fiscal Deficit target for 2018-19. Another red flag rises: CAD is 2.5 percent," Chidambaram said in a series of tweets while reacting to the Budget.
Arun Jaitley said the budget is unquestionably pro-growth, fiscally prudent, pro-farmer, pro-poor and strengthens the purchasing power of the middle class. He said the budget expands spending while pragmatically sticking to fiscal prudence.
"The tax breaks for the salaried, middle class, pensioners is being welcomed and is far more than expectations. This is definitely a budget for the middle class. With the additional tax rebate, an individual with total income up to Rs. 5 lakhs will have no tax to be paid. This results in an assured tax benefit including up to ₹13,000 at this level. Increase in standard deduction by ₹10,000 for salaried taxpayers would ensure additional tax saving of ₹2,080 to 3,120 for tax payers not paying surcharge," Tapati Ghose, Partner, Deloitte India, said.
The markets gained over 1% as interim finance minister Piyush Goyal made taxation proposal in the interim budget on Friday. At 12:55 pm, the Sensex was at 36,657.26, up 400.57 points or 1.10% while the Nifty was at 10,943.55, up 112.60 points or 1.04%.
BSE Midcap and BSE Smallcap indices are also up nearly 1%. In the one yera period, from last Budget till now, the Sensex rose 1.5%, Nifty fell 1.2%, BSE MidCap fell 15.2% while BSE SmallCap declined 25.2%.
Garima Kapoor, economist and vice president, Elara Capital, Mumbai:
"The budget is clearly farm-focused, with elections on the mind. Farmers, age-old, unorganised sector, MSME and middle class - they're all finding favour, with the agricultural sector getting the biggest support."
Rupa Rege Nitsure, group chief economist, L&T Finance Holdings, Mumbai:
"It's more of performance reporting and aspirations than any big-ticket changes. This was expected as it is an interim Budget valid for a few months. It needs to be stated in unambiguous fashion that the credit for inflation control and AQR primarily goes to the RBI."
Abheek Barua, chief economist, HDFC Bank:
"This is on expected lines. There is a slight slip in fiscal deficit. The new income support scheme is tepid, in terms of the actual numbers. It should not lead to a blowout in the fiscal deficit if it indeed is part of the budget when it is finally announced in full form."
Poorva Prakash, Senior Director, Deloitte India, said that individuals having income of ₹6.5 lakh will not be required to pay any tax if they take full deduction of 80C on savings instruments like PPF etc. He said standard deduction raised from Rs. 40,000 to Rs. 50,000 benefiting the salaries class.
Hitesh Sawhney of PwC India said the government has expectedly sought to cater to the demands of the salaried and middle class taxpayer, reducing the tax outflow and extending benefits on residential house rental income and sale.
Capital gains tax exemption under Section 54 raised to ₹2 crore
Tax on notional rent on unsold inventory to not be paid for 2 years
No TDS on post office savings up to ₹40,000
No TDS on rental income up to ₹2,40,000 per year
Standard deduction to be raised from Rs. 40,000 to Rs. 50,000
No tax if you own second house
Salary earners of up to ₹6,50,000 income to not pay tax if they make tax related investments
Salary earners up to ₹5,00,000 annual income to get full tax rebate.
Total expenditure rose by 13%
FY20 total expenditure seen at Rs. 27.84 trillion
FY20 capital expenditure seen at Rs. 3,36,292 crore
"We maintained the path to establish 3% fiscal deficit by 2020," Piyush Goyal said.
Fiscal deficit pegged at 3.4% of GDP for FY20
Government lays out a 10-year roadmap to improve ease of living and make India a pollution-free country by leading the world in transport and energy storage devices,
bringing down dependency on imports for energy needs. The roadmap also envisions people traveling in electric cars.
Finance minister Piyush Goyal announced that India is poised to become a $5 trillion economy in 5 years and aspires to become a $10 trillion economy in the next 8 years.
The Union budget has allocated ₹1.58 trillion for Indian Railways to expand the railway infrastructure in the country.
In his interim-budget speech on Friday, the finance minister Piyush Goyal said Indian Railways has witnessed its safest year in the history in 2018-19 and the national carrier has been able to remove all unmanned railway crossing across all the broad gauge tracks in the country.
He also outlined the achievements of his government stating that the people of India would soon have world-class train experience through semi-high speed train Vande Bharat Express which is a product of Indian engineering. The minister also hoped that Indian Railways would improve its operating ratio and try to improve it from 98.4% to further 95%.
All income tax returns will now be processed in 24 hours and refunds issued simultaneously. Within next 2 years, returns chosen for scrutiny will also be done digitally with anonymity.
Want GST burden on homebuyers lessened and we have formed a group of ministers (GoM) to look into it: Piyush Goyal
Small and marginal farmers owning less than 5 acres of land will receive the first instalment soon, finance minister Piyush Goyal said in his budget speech. According to Goyal, the scheme will run from 1 December 2018 and towards this the budget has allocated an additional ₹20,000 crore in the revised estimates for 2018-19.
For 2019-20, the Prime Minister Kisan Samman Nidhi or PM-Kisan scheme received a budgetary allocation of ₹75,000 crore.
Announcing the scheme, finance minister Goyal said the direct income support which farmers will receive in their bank accounts shortly will help them lead a life of dignity and respect.
According to the budget speech, about 120 million farm households will receive an income support of ₹2,000, thrice a year.
Apart from the income transfer scheme, the budget also approved doubling the interest subsidy on crop loans, and also raised the interest subvention when farm loans are restructured in times of natural calamity.
The defence budget, interim finance minister Piyush Goyal announced, was increased for the first time to three lakh crore in 2019-20 “for securing our borders and to maintain preparedness of highest order and if necessary additional funds will be provided."
Last year, out of total allocation of Rs295,511 crore for defence budget, only Rs99,947 crore was set aside for capital outlay to purchase of new weapons, aircraft, warships and other military hardware. The allocation has been estimated at around 1.58% of the GDP and 12.10% of the total budget of Rs2,442,213 crore for 2018-19.
Tax collections increased ₹6 lakh crore to 12 lakh crore, return filings have also gone up. All returns will now be processed in 24 hours and refunds issued simultaneously. Within next 2 years, returns chosen for scrutiny will also be done digitally with anonymity.
Targeting a huge electorate ahead of the 2019 polls, Finance Minister Piyush Goyal Friday announced a mega pension scheme to provide assured pension of Rs. 3000 rupees per month to nearly 10 crore people working in largely fragmented informal sector.
These informal workers joining the pension scheme at 18 years will pay Rs. 55 per month and Rs. 100 if joining at the age of 29. The pension will be paid once they reached the age of 60.
“(We are starting) Mega Pension Yojana, namely Pradhan Mantri Shram Yogi Mandhan, to provide assured monthly pension of 3000 rupees per month, with contribution of 100 rupees per month, for workers in unorganized sector after 60 years of age," Goyal said in his Budget speech.
“Will benefit 10 crore workers in unorganized sector, may become the world's biggest pension scheme for unorganized sector in five years," he added.
Domestic workers, beedi workers , small shop workers among others may benefit from the announcement but the details on how it will be implemented and how the government will calculate the income threshold is yet to be spelt out.
Budgetary support for Railways has been fixed at ₹64,587 crore for FY20
Railways' operating ratio seen at 96.2% in FY19 and 95% in FY20
Finance Minister Piyush Goyal Friday said ₹3 lakh crore have been recovered from big corporate loan defaulters. Presenting the Interim Budget for 2019-20 in the Lok Sabha, Goyal said, "We have stopped culture of phone banking".
He was referring to allegations of giving of "rampant loans over phone" during the UPA regime.
Goyal, stepped in as interim finance minister after Arun Jaitley had to fly to New York for medical treatment, further said Bank of India, Oriental Bank of Commerce and Bank of Maharashtra have been removed from the PCA (prompt corrective action) framework of the RBI.
"I hope other banks too would soon come out of PCA framework," he said.
The finance minister also said, "Our government had the guts to ask RBI to look at bad loans and present correct picture to nation".
He said the Insolvency and Bankruptcy Code was helping in recovery of non-performing loans. "Even big businessmen are now worried about loans," Goyal said.
Defence Budget crosses ₹3 lakh crore mark in FY20 Budget
The National Democratic Alliance government boosted allocation for the rural employment guarantee programme by ₹5000 crores to ₹55,000 crores in the 2019-20 interim budget. The scheme that is seen as a lifeline for small farmers and agricultural labourers in times of rural distress given that it provides 100 days of unskilled employment to them.
Govt projects to source 25% material from SMEs, 3% from only women-owned SMEs
Total of 8 crore cooking gas cylinders to be distributed by next year under PM Ujwala Yojana
Govt launches mega pension scheme for social security coverage of unorganised labour
Unorganised labour to get ₹3,000 per month after age of 60 under mega pension scheme
Govt to contribute equally in pension accounts under mega pension scheme
Gratuity exemption limit tripled to ₹0 lakh from 10 lakh
Allocation of ₹750 crore under Rashtriya Gokul Yojana for protection of cows. The government will create a separate department for fisheries.
The Narendra Modi government missed its fiscal deficit target for the second consecutive year in 2018-19 with Finance minister Piyush Goyal telling the Parliament during his Interim Budget speech that revised estimate of fiscal deficit in 2018-19 stands at 3.4% of GDP against the target of 3.3% of GDP.
In 2017-18, government had missed the budget target of 3.2% with fiscal deficit rising to 3.5% of GDP.
Lower than expected GST collections and tardy progress in the disinvestment process are considered to be the main reasons for the miss in fiscal deficit target in 2018-19.
According to the Controller General of Accounts (CGA) data up to November, 2018, fiscal deficit in the first eight months stood at 114.8% of the full year target against 112% during the same period a year ago.
Pradhan Mantri Gram Sadak Yojana road scheme to get ₹19,000 crore in FY20
Electricity for all households to be a reality by end of next month
Ayushman Bharat has treated 1 million people so far
22nd AIIMS to come up soon
Finance minister Piyush Goel highlighted a host of achievements claiming that the Modi government has walked the talk. "We have reversed policy paralysis...India is solidly back on track," he said. However, Goyal's remark on doubling farmer income by 2022, was received with boos from the opposition bench.
"If we had not controlled inflation, our families would have been spending 35-40% more on basic amenities today. It's like an additional tax for the poor and the middle class. At 2.9% inflation is at its lowest, says Goyal, adding that the 2018-19 revised fiscal deficit target is at 3.4%, and even the current account deficit target for FY19 - 2.5% of GDP.
The FM also claimed that the foundation has been laid by the government with structural reforms for strong economic growth.
Fiscal deficit has been brought down to 3.4% in FY19, Piyush Goyal said. "Massive surge in Foreign Direct Investment. The last five years have witnessed a wave of structural reforms. The GST, banking reforms, insolvency code are path-breaking moves," he said.
Govt has broken the back of inflation, bringing it down to average 4.6%, Goyal said.
Piyush Goyal presents budget in Parliament and begins speech by saying that he is deeply concerned by Arun Jaitley's absence. "Under the leadership of PM Narendra Modi, we have given the most stable and clean government. We have moved ahead of the policy paralysis that had engulfed the nation under the previous government," he said.
The market continues to stay firm as investors keep a cautious eye as interim finance minister Piyush Goyal prepares to presents his first and the government's last budget ahead of the general election.
Indian markets were off to positive start on Budget day, with Sensex up over 100 points and Nifty trading above 10,850. At 9.19 a.m., the Sensex traded at 36,378.91, higher by 122.22 points or 0.34 per cent from the previous close of 36,256.69 points.
Don’t be surprised if Piyush Goyal presents to you a full-fledged budget and gives you all those tax breaks that you prayed for in the last four years. Another announcement could be on universal basic income or a minimum wage scheme for the poor. (Read more here)
Here are the key officials who fitted the nuts and bolts of the interim budget that Union finance minister Piyush Goyal presents in Parliament today: Finance secretary Ajay Narayan Jha, Revenue secretary Ajay Bhushan Pandey, Department of economic affairs secretary Subhash Chandra Garg, Department of investment and public assets management secretary Atanu Chakraborty, CBDT chairperson Sushil Chandra and chief economic advisor Krishnamurthy Subramanian.
Global ratings agency Fitch has warned against higher pre-election spending announcements in the upcoming interim budget which could risk a second consecutive year of fiscal slippage. According to a note prepared by Fitch Ratings, pressure for new expenditure to attract votes, particularly among rural and small-business owner voters, has increased as polls have shown the ruling Bharatiya Janata Party (BJP) is becoming "less assured of victory in the general elections".
With all the modifications under GST requiring a nod of the GST Council first, the budget from an indirect tax perspective is essentially expected to only cover announcements on customs and on duties, taxes applicable on GST excluded sectors, said Abhishek Jain, Tax Partner, EY India. He said there is a general expectation of some customs duty rationalization on imports by the healthcare sector, rectification to amplify the ‘Make in India’ leitmotif and launch of schemes like E-Wallet, etc.
The budget, which is interim and is likely to be followed by a full one in July, is expected to project economic growth of around 7.5 percent for the next financial year, while expanding capital spending on railways, roads, ports by 7-8 percent, and estimating an increase in revenue of about 15 percent, a Reuters report said.
As Finance minister Piyush Goyal readies to present his first and the government's last Budget ahead of the general election, Mint takes a look at the things to watch out for in the interim budget: Farm package, universal basic income, sops for MSME and small traders, fiscal consolidation and changes in direct taxes. (Read here)
The government may announce some tax relief for the middle or lower income groups. But some tax experts don’t expect the finance minister to announce sweeping changes on the income tax front, especially before the release of Direct Tax Code report, due on February 28. “It is important to notify the tax rates because without notifying tax rates, the government cannot collect taxes during the intervening period—from April 1 to the next full-scale budget after the new government is sworn in," says Divya Baweja, partner at Deloitte India.
The Opposition Thursday made it clear to the government at an all-party meeting here that it will not allow passage of any contentious bills in the Budget Session of Parliament that started with President Ram Nath Kovind's address to a joint sitting of both the houses.
The opposition parties have said they will await the response of the government on whether it would take up the contentious bills during the brief Budget Session and are in a "wait and watch" mode on how the government moved forward in taking the opposition together.
Prime Minister Narendra Modi conveyed to the opposition parties during the all-party meeting in Parliament Library building that his government will present an interim budget, much to the relief of many among the opposition who feared that government will present a "full-fledged" budget Friday. (PTI)
As per practice, a Vote-on-Account or approval for essential government spending for a limited period is taken in an election year and a full-fledged budget presented by the new government.
While P Chidambaram had presented the previous UPA government's Vote-on-Account in February 2014, Jaitley presented a full budget in July that year.
Last year, Narendra Modi-led government scrapped a colonial-era tradition of presenting the Budget at the end of February and it is now presented on February 1, so as to allow Parliamentary approvals to be completed before the start of the next financial year.